The National Bank of Ethiopia will begin regular foreign exchange auctions, starting with a US$50 million auction on April 1st.
In mid-2024, Ethiopia liberalised its foreign exchange regime which resulted in a sharp devaluation of the country’s currency in the first weeks.Since then, NBE has been monitoring market dynamics to close the gap between what commercial banks and the parallel markets offer.Its last FX auction on February saw the participation of 27 banks and an average Birr 135.6 per USD.
“Since the launch of a comprehensive program of macroeconomic reforms in July 2024, Ethiopia’s balance of payments position has been showing steady and significant improvement,” NBE said in a statement on Monday.
“FX reserves at the central bank have reached record levels,” NBE added.
The central bank has also said its gold holdings have grown “above initial expectations” with the delivery of record high gold supplies. The NBE is the only authorised gold exporter in Ethiopia.
The new measure will introduce some predictability and stability in the forex market. The NBE sees this as crucial for its broader monetary policy goals, which have seen its MPC retain the base rate during its first meetings to curb inflation.